Sydney’s property market may have experienced its biggest correction since the 1980s but you would be forgiven for thinking otherwise thanks to impressive results at the top end.
But the median house price for the top 10 per cent of the market has taken a hit. It sits at $2.5 million, down from $2.9 million at its peak in 2017.
While it may look like the city is experiencing a two-speed market, the higher end acts as a bellwether, according to Domain analyst Eliza Owen.
“Even though the high end of the market is recovering while the lower end of the market may still be bottoming out, no suburb escapes the cycle,” Ms Owen said.
She said some of the biggest declines were recorded at the high end of the market in Domain’s March House Price Report but has since improved, indicating it may have bottomed out sooner than the rest of the market.
The lower-priced segments of the property market could eventually expect to see signs of recovery too, according to Ms Owen.
While the top end of the market may be further along the property cycle, structural factors — including changes to comprehensive credit reporting and tougher income assessments — also benefit it.
“Those on a higher income, who have no trouble making repayments and keeping a good credit score, are likely to see that priced into mortgage rate offers,” Ms Owen said. “But generally the current lending environment favours those on higher incomes.
Sydney has only recorded five $20 million-plus trophy home sales this year, down from last year’s bonanza where all top 20 sales were in that range.
Rose and Jones buyers’ agent Lauren Goudy said the lack of stock was the biggest issue in the higher end of the real estate market.
“The amount of transactions could be down as much as 50 per cent compared [in some high-areas] with the number of properties transacting in the peak of the market,” Ms Goudy said.
“This problem impacts the higher end more than the rest of the market because there is less mortgage stress at this level as well as the undersupply of properties.”
Oasis Skeen Property senior buyers’ agent Paul Wilcox agreed, saying though buyers were ready to buy, vendors were holding back.
“No one is selling at the moment … vendors need a bit of comfort, they need to see listings on the market. They seem to be comfortable in numbers,” Mr Wilcox said, adding that when his buyers find something they are interested in, “close enough is good enough.”
But low stock levels and transaction volumes meant it was too early to call a recovery in the top end, according to selling agent Ben Collier of The Agency North.
“The real litmus test will be applied in the coming three to four weeks as we come out of the winter school holiday period and see the true level of stock come onto the market and the market’s ability to absorb this level of supply,” Mr Collier said.
“We really won’t have a clearer sense of where it sits until the latter half of September.
“Markets are a herd mentality. There is still going to be a high level of pipeline sellers sitting on the sidelines, waiting to see a higher level of confidence in the market, which will dictate whether they choose to sell or not.”